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MUMBAI : ICICI Bank on Saturday reported a standalone net profit of 6,905 crore in the June quarter of FY23, up 50% from 4,616 crore in the same period last year, owing to higher net interest income (NII) and lower provisions.

Its net interest income (NII), the difference between interest earned and interest expended, rose 21% year-on-year (y-o-y) to 13,210 crore in the Q1 of FY23. Net interest margin (NIM), a key measure of profitability, expanded 1 basis point (bps) sequentially to 4.01%. On the other hand, the bank’s provisions were down 60% y-o-y to 1,144 crore. This includes contingency provisions of 1,050 crore.

“This is a general provision and you are seeing volatility in the market, and it is good to keep a contingency provision," Sandeep Batra, executive director, ICICI Bank told reporters in a post-results conference call.

ICICI Bank’s provision coverage ratio, a measure of the funds set aside to cover bad loans, stood at 79.6% as on 30 June, up from 79.2% as on 31 March. The private sector lender saw improved asset quality as its gross non-performing assets (NPAs) as a percentage of gross advances declined 19 bps sequentially to 3.41% and the net NPA ratio stood at 0.7%, down 6 bps from the March quarter.

On a gross basis, the bank saw more slippages than the March quarter, at 5,825 crore. Of this, 5,037 crore originated from the retail, rural and business banking portfolio; the remaining 788 crore came from corporate and small and medium enterprise customers. On a net basis, though, the bank added bad loans of 382 crore, as against a net decline of 489 crore in the sequential quarter.

“We have been mentioning this for sometime now that for the retail portfolio it is the net additions that you should be looking at, rather than the gross numbers. Because, apart from the additions, there was an equivalent amount of deletion which has also happened. Overall, the numbers are looking pretty healthy," said Batra.

According to Anindya Banerjee, chief financial officer of the bank, during the first and third quarter of every financial year, bad loan additions are a little bit higher because that is when the Kisan Credit Card non-performing assets (NPAs) get recognized based on the billing and repayment cycle.

The bank’s domestic loan book grew 22% y-o-y to 8.5 trillion, with retail loans growing at 24% to 4.8 trillion. Asked if he sees the bank being able to sustain this level of growth – higher than its peers – Batra said the bank does have any growth target, per se.

“Whatever meets our filters, we are happy to grow that business. We do not target a particular growth," he said.

Total deposits of ICICI Bank increased 13.4% y-o-y 10.5 trillion as on 30 June. Average current account savings account (CASA) deposits ratio was at 45.8% in Q1 FY23, up 210 bps from the same period last year.

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